The Classic Partners LLP
Section 156 — Demand Notice
A Section 156 notice demands payment of tax, interest, or penalty within 30 days. We verify the demand, get wrong demands corrected, arrange stays, and manage payment strategy.
Handle My DemandWhat is a Section 156 Demand Notice?
A notice of demand under Section 156 of the Income Tax Act is issued when any tax, interest, penalty, or fine becomes payable in consequence of an order — an intimation under Section 143(1), a scrutiny assessment order, a reassessment under Section 147, or a penalty order such as Section 270A.
The demand must normally be paid within 30 days. Beyond that, interest at 1% per month accrues under Section 220(2), you can be treated as an assessee in default, and recovery measures — bank attachment, refund adjustment under Section 245, even property attachment — can follow. But a demand is not always payable as-is: it can be wrong, rectifiable, stayable, or appealable.
Your Options After a Demand Notice
- Pay the demand — where it is correct, payment within 30 days avoids interest and recovery.
- Disagree on the portal — respond under "Response to Outstanding Demand" with proof where the demand is wrong.
- File rectification — Section 154 application for mistakes like missed TDS credit or unmapped challans.
- Appeal and stay — challenge the underlying order before CIT (Appeals) and seek a stay, typically on payment of 20% of the disputed demand.
- Instalments — request the officer to allow payment in instalments where lump-sum payment causes hardship.
What We Handle
Demand Verification
Checking the order, computation, and credits behind the demand.
Portal Response
Agree/disagree filings with challans, TDS proofs, and orders.
Rectification
Section 154 applications to correct apparent mistakes.
Stay of Demand
Stay applications before the AO, CIT(A), and ITAT.
Instalment Requests
Negotiating staggered payment where cash flow is tight.
Appeal Filing
Challenging the underlying order through CIT appeal and ITAT.
Why Choose The Classic Partners
- Qualified Chartered Accountants who manage demands strategically, not just pay them.
- Recovery protection — stays and responses filed before coercive action starts.
- Interest minimisation — every avoidable rupee of 220(2) interest avoided.
- Transparent fees and a single point of contact for your case.
Frequently Asked Questions
How much time do I get to pay a Section 156 demand?
30 days from service of the notice. The officer can reduce this period with prior approval in special cases, or extend time and allow instalments on application.
What happens if I don't pay within 30 days?
Interest at 1% per month accrues under Section 220(2), you become an assessee in default, a further penalty can be levied under Section 221, and recovery measures like bank attachment and refund adjustment can begin.
Do I have to pay the full demand if I'm filing an appeal?
No. On filing an appeal, you can apply for a stay of demand. As per CBDT guidelines, recovery is generally kept in abeyance on payment of 20% of the disputed demand until the first appeal is decided.
The demand is wrong — TDS credit was not given. What do I do?
File a disagree response on the portal with your Form 26AS and a rectification application under Section 154. Once the credit is allowed, the demand is reduced or deleted.
Can I pay the demand in instalments?
Yes. Under Section 220(3), you can apply to the assessing officer before the due date for extension of time or payment in instalments, explaining the financial hardship involved.
Received a tax demand notice?
Verify before you pay — get the demand reviewed by our CAs today.
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